So we got a deal to raise the debt ceiling, at least until February. But when Fitch warned it might downgrade the U.S. credit rating, it wasn't just talking about the likelihood of the U.S. defaulting on its debt. A Fitch downgrade is not only still possible - it's probable.
Here's why it could happen and what it would mean...
By themselves, they don't seem to mean much: 630,000, 700%, $3.65 million, 19. But once you see them in context, you'll realize why these numbers matter. Besides, where else can you read about frontier markets, Bitcoins, and a phantom Twitter stock
Yesterday (Monday), Money Morning Chief Investment Strategist Keith Fitz-Gerald appeared on FOX Business' "Varney & Co."to make projections about what a stalemate on the debt ceiling will do to the market.
We are a little more than 24 hours away from the day that Treasury Secretary Jack Lew has said we'll exhaust the "extraordinary measures" and go over our debt limit. But even with the impending deadline, over the last five days the market has shakily climbed, with the Dow up 2.35%, Nasdaq up 1.16%, and the S&P 500 up slightly to 1.9%.
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While the markets have mostly brushed off the government shutdown, a failure by Congress to raise the debt ceiling within the next week could trigger the kind of meltdown not seen since the 2008 financial crisis. But instead of just hoping Washington averts disaster in the nick of time,
you can take steps to protect yourself...
As of midnight Monday, the government shutdown is upon us. But this is only the first of several budget-battle flashpoints coming over the next few months that will thrash the markets. And despite the angst it will bring, every Washington screwup has a silver lining for investors who know how to play it...
The U.S. debt ceiling deadline lies just a few weeks away, raising the prospect of the nation defaulting on loans, seeing its credit rating downgraded and being plunged into a recession.
And there's no sign U.S. President Barack Obama or congressional Republicans are ready to budge on their positions on what to do about the debt ceiling.
President Obama once again made his case for raising the debt ceiling during a White House press conference today (Monday) and faulted Republicans for what he portrayed as a misguided position.
"They will not collect a ransom in exchange for not crashing the American economy," President Obama said. "The full faith and credit of the United States of America is not a bargaining chip."
If the GOP lawmakers refuse to increase the U.S. debt ceiling - they're holding out for dollar-for-dollar spending cuts - the president said markets could "go haywire," government payments including Social Security and military personnel checks would be delayed and the economy would slide into recession.
"It would be a self-inflicted wound on the economy," President Obama said. "It would slow down our growth and tip us into recession. To even entertain the idea of this happening is irresponsible. It's absurd."
